Multiple choice

A bank pays 4% interest compounded annually. If the original investment was £1100, find the amount at the end of 6 years.

  1. £1264.29

  2. £1324.82

  3. £1391.85

  4. £1529.21
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C Correct answer
Explanation

Amount = P * (1 + r/100)^n = 1100 * (1.04)^6. (1.04)^6 is approximately 1.2653. 1100 * 1.2653 = 1391.85.

AI explanation

Using the compound interest formula A = P(1 + r/100)^n, the principal is 1100, the rate is 4%, and the time is 6 years. The calculation is A = 1100 * (1.04)^6. Computing 1.04 to the sixth power gives approximately 1.265319, and multiplying by 1100 yields £1391.85.

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